By K. B. Bhujle, Advocate
New Page 2
45 Void transfer u/s.281 of Income-tax Act,
1961 : In order to declare a transfer as fraudulent u/s.281, appropriate
proceedings should be taken as required to be taken u/s.53 of Transfer of
Property Act, 1882. Order of TRO declaring transfer void was without
jurisdiction.
[Ms. Ruchi Mehta v. UOI, 170 Taxman 289 (Bom.)]
The petitioner purchased rights, title and interest of one
‘S’ who was defaulter under the Act, in a shop and accordingly a sale deed was
executed between the builder and the petitioner. Later, the TRO attached the
said shop for recovery of tax dues of ‘S’. On appeal, the Commissioner set aside
the action of attachment of the subject property. Thereafter, the TRO in
exercise of his powers u/s.281, passed an order declaring the sale of shop as
null and void.
The Bombay High Court allowed the writ petition filed by the
petitioner and held as under :
“(i) S. 281 had come up for consideration before the
Supreme Court in case of TRO v. Gangadhar Vishwanath Ranade, (1998) 234
ITR 188. The Supreme Court observed that S. 281 merely declared what the law
was. The Supreme Court further held that S. 281 does not prescribe any
adjudicatory machinery for deciding any question which may arise u/s.281. The
Court further observed that in order to declare a transfer as fraudulent under
this Section, appropriate proceedings would have to be taken in accordance
with law in the same manner as they are required to be taken u/s.53 of the
Transfer of Property Act, 1882.
(ii) Considering the law declared by the Supreme Court in
the case of Gangadhar Vishwanath Ranade, it would be clear that the action of
the TRO in declaring the transfer of the property in favour of the petitioner
as void was clearly without jurisdiction.
(iii) The impugned order also attached civil consequences.
The TRO, before passing any such order, ought to have given an opportunity to
the petitioner if, in law, the TRO could exercise jurisdiction u/s.281. That
opportunity was also not given. The order, therefore, must also be set aside for
violation of the principles of natural justice and fair play.”
